From 'snowboarding' to worth 100,000 million euros

Shopify employees in Waterloo, Ontario.Cole Burston / Bloomberg

Few sectors have risen to prosperity during the pandemic.

One of them is Internet commerce.

Beyond Amazon, a Canadian firm has drawn powerful attention.

Shopify helps create an e-commerce website by offering tools such as payment, monitoring,

and shipping services to small and medium-sized businesses;

a lifesaver during the times of the coronavirus.

Raphaël Morneau-Bérubé founded Les Flavoureux in 2014, a food company in Gatineau (Quebec) and, given its geographical proximity, with a large clientele in Ottawa, the Canadian capital.

“We specialize in

corporate

services, wedding banquets and takeout.

In March, as a result of the pandemic, we only continued with counter sales ”, he says.

That's when he thought of e-commerce and a friend suggested Shopify.

“With the platform we offered home delivery.

It allowed us to get through the tough months.

Currently, around 70% of our income comes from counter sales, but many of the new clients we get thanks to the platform ”, he adds.

In 2004 Tobias Lütke, Daniel Weinard and Scott Lake wanted to open an

store

to sell snowboards.

Young entrepreneurs realized that it was a complex task for those with discreet computer skills and they detected a good business opportunity.

Two years later, they founded Shopify in Ottawa.

The firm received some C $ 22 million (€ 14.1 million) in venture capital funds in 2011.

Subsequently, he acquired a

mobile

development firm

and a design studio.

Sylvain Sénécal, holder of the Chair in Electronic Commerce at the Montreal School of Commercial Studies, believes that “Shopify offers a very complete space to take the numerical leap, but it has also extended its portfolio of services.

They also provide in-store solutions for merchants.

For example, points of payment and consultation of physical and

sales

in a single database.

This diversification brought a lot of value ”.

Although in reality, Shopify does not have its own delivery system like Amazon does.

The firm puts its clients in contact with strategic partners it has on a national or international level.

The company was listed on the Toronto Stock Exchange in 2015. The share was then traded for C $ 35;

currently it has climbed to 1,268 dollars (813 euros).

The firm's market capitalization is around 100,000 million euros, it has about 5,000 employees and clients in 175 countries.

Although its growth was remarkable for several years (for example, it had income in 2019 of 1,351 million euros, 576 in 2017), it had been in losses for two years (106 million euros in 2019).

But the pandemic has meant a kind of elevator for this company.

In July, the firm announced its results for the second quarter: it entered 610 million, 97% more than the same period in 2019, and accumulates a semester with a positive net result (3.8 million).

Tobias Lütke, their CEO, noted that they were doing everything possible to help companies in this new reality.

"The spread of covid-19 is going to be a difficult time for all entrepreneurs," he said.

Jean-Michel Lemieux, CTO, had expressed on Twitter a short time ago that they were seeing sales volumes similar to those of Black Friday.

Shopify is already the largest market capitalization company in Maple Leaf Country.

Richard Tse, an analyst at National Bank, wrote at the time that Shopify's value was being amplified by the pandemic;

He also underlined "the international drive of the company, which now represents 70% of its clients on the platform."

Tobias Lütke stated that the pandemic anticipated the future of electronic commerce: "The year 2030 arrived in 2020. Covid-19 accelerated this phenomenon that was already underway."

At the start of the pandemic, Shopify arranged for most of its employees to telecommute.

The firm announced in May its intention to continue teleworking indefinitely.

Karla Martínez is the commercial director of Pintart, a virtual gallery of Mexican art that has used the services of the Canadian firm since its opening in 2019.

“We were able to get started thanks to Shopify.

Otherwise it would have been impossible due to time and investment to have a native platform, "she says by phone from Monterrey.

“The first months of the pandemic were difficult because we do not offer an essential product.

However, sales are recovering.

We are incorporating emerging artists ”, he adds.

Big enterprises

In presenting the latest financial results, Harley Finkelstein, Shopify's COO, noted that the numbers also increased because some large companies have opened their own online stores for the first time or have contracted the services of the Canadian firm.

This is the case, among others, of Kraft Heinz, Snickers and Molson Coors.

Opinions are divided among Canadian financial pens regarding the future of Shopify's share price.

Factors such as the coronavirus (many entrepreneurs still depend on high sales in physical stores), the pace of growth of electronic commerce and the development of rival firms make forecasting difficult.

However, one factor in Shopify's favor is the series of moves it has made.

One of them was to extend the free trial period from one to three months during the pandemic.

“People will surely pay if they want to continue online sales.

It was an interesting decision regarding customer retention, ”says Sylvain Sénécal.

Shopify signed an agreement with Walmart - with the aim of offering third-party products on the US sales page - and acquired 6 River Systems, a company specializing in warehousing and delivery systems.

Some media pronounce the name of the Canadian firm as a probable rival of weight for Amazon.

“They are not direct competitors in general, although they are on the periphery for certain services and logistics.

It is still too early to establish a comparison of this type, ”says Sénécal.